June 2007

A Work In Progress: Progressive Video Poker by Linda Boyd

Recently I did a “podcast” with American Casino Guide’s Steve Bourie. I mentioned that video poker games with progressive royals could be a good play. Steve, a knowledgeable video poker player, said most experts didn’t consider progressive jackpots too good a play, although he had heard of teams pouncing on high progressives. Steve was right, often teams of pros do look for high progressives and so do other smart players.

Obviously, some progressives are better than others. How then, can a player decide whether to choose a progressive bank as well as when to stop playing? After all, royals are a long shot (approximately once every 40,000 hands, depending on the game) and if you fail to get a royal, then the play isn’t any better than the game at reset. Truthfully, in some respects it’s worse since you have to alter your strategy to go for the royal, increasing the risk of losing your money. Let’s take a close look at some good progressive games, strategy changes and rules of thumb to make adjustments for the constantly changing jackpot amounts.


Vocabulary:

Linked Machines: Machines that have some common jackpots or, in the case of video lottery terminals (VLTs), devices with common commands. For VLTs, linkage is needed to comply with shutdown mandates and auditing requirements.

Progressive: A jackpot that increases as more money is played on all the linked machines. Some megajackpots will include devices that are linked with other casinos or even states.
Reset: The amount paid before a progressive is applied. For example, most royals return 4,000 coins for a five-coin wager at reset.

Meter: The device that changes as more money is wagered. The faster the meter, the quicker the jackpot grows.

Sequential Royal: Royal in ascending order: ten, jack, queen, king and ace; or descending order: ace, king, queen, jack and ten. The cards must appear on the display screen in the exact order described. (The odds of getting a sequential royal are approximately 1 in 4.8 million. You’ll get a royal around once every 40,000 hands, depending on the game; one out of every 120 royals will be sequential).

Short-coin: Playing less than the maximum allowed for each game. This almost always makes you ineligible for the progressive jackpot and should be avoided. For most video poker games the maximum is five coins, but you should check since some require 10 coins or more.
Game Volatility: Refers to the risk factor of a game; in general, the more the expected return (ER) relies on infrequent hands, the greater the risk.


Types of Progressives:

Six-Way: As implied, there are six different progressive jackpots. Mostly, you’ll find this on Double Double Bonus Poker (DDB). Check the paytable to see which winning hands are included in the progressive. A typical DDB progressive has a separate meter for: 1.) Four of a kind, fives through kings, 2.) Four of a kind, twos, threes and fours, 3.) Four of a kind, twos, threes and fours plus a “kicker.” A kicker is an ace, two, three or four, 4.) Four aces, 5.) Four aces plus a kicker, 6.) Royal flush.

Note that some DDB progressive games are seven-way because they pay a progressive for a straight flush as well as those listed above.

Royal Flush: Almost all video poker progressive games include a jackpot for a royal. Some pay for a sequential royal as well, but if they do it adds little to the ER. That’s because even a 50,000-coin bonus is small when compared to a 1 in 4.8 million chance of occurring.

Other: Make sure you study the paytable carefully since there are other possibilities for progressive payouts. For example, some coyote ugly deuces games offer progressives for the following hands: Straight flush, Five of a kind, Wild royal, Royal flush. Even with progressive jackpots, coyotes are usually a poor choice because the payout for frequent hands diminishes the ER so much.


Reasons to Play:

Whenever I think of progressives I remember the shrewd and wonderfully charming Elliott Shapiro who I consider the “king of progressives.” Shortly before his death, I met Elliott and his wife Joanie, a perfect couple. Elliot and I discussed progressives while Joanie bounced around from bank to bank. We were swapping war stories, one-upping each other, when he whipped out a hand-written sheet with meticulously recorded data; checkmate to Elliott. So what’s so good about progressives?

Changing Times: Recently casinos started downgrading their paytables, a euphemism for decreasing the payout for winning combinations and, therefore, the ER. Choices that didn’t look so hot in the past are suddenly looking better.

Eligible for Benefits: Lately casinos are giving fewer perks to players who choose video poker games with higher expected returns. Reduced cash points and bounceback cash, fewer or no comps, ineligibility for promos or multiple points are just a few examples. Often you’ll see a sign nearby or on the machine itself letting you know, so make sure you check. Progressives, however, are almost always eligible for full cash on slot cards, bounceback cash, multiple points and casino promotions.

Maximum/ Minimum Statutes: Each state legislature sets its maximum and minimum mandates for gaming, most are less than 100%. Progressives slip under the wire because the state counts the reset value in determining the expected return. This means a progressive jackpot can pay well over a 100% ER and still be legal.

Ineligible Contributors: Progressives are particularly good choices for players in the Midwest. The reason is most casinos draw locals, many with cabin fever, they want to get out of the house for a few hours. This translates to lots of people who play short-coin so that they can play more hands on their bankroll. These players are contributing to the rising progressive meter, although they are ineligible to collect the jackpot.

Sky’s the Limit ERs: Usually there’s no limit to how high progressives can grow. Beware of casinos doing you a big “favor” by limiting the jackpot to $1,199, so you can avoid a W-2G.


Strategy Changes:

The biggest complaint about progressives is that the expected return assumes perfect play and that’s difficult since the strategy is based on a constantly changing paytable. This point is exaggerated and here’s why.

Minimum Adjustments: If the only progressive jackpot is for a royal flush, then that’s where you’ll have to make strategy adjustments. The changes result in going for the royal more often than without a progressive, also, they’re more intuitive than the game itself. As the royal progressive increases, you hold more combinations that could result in a royal; for example, hold three cards for a royal instead of a paying pair. If you’re a precise player, then you can use my strategy cards, which indicate the exact number of coins to make this the correct hold. (My strategy cards are free with my new book, The Video Poker Edge.) If you just want a ballpark, then change progressive amounts during practice on the tutorial software. The important thing to remember is that the strategy for most frequent hands will be unchanged.

Multiple Progressive Jackpots: As previously mentioned, some progressives are paid for several winning combinations. This is mostly for Double Double Bonus Poker and involves few, if any, changes. You’re already holding just the aces when dealt either two pair (one pair of aces) or a full house (three aces) and the jackpot rarely gets high enough to hold either a low pair over two pair or just the three low card portion of any full house.


Progressive Concerns:

It’s true that progressives have a greater variance (risk) than non-progressive versions and you’ll increase the likelihood of having your winnings reported to the IRS as the jackpot values increase. However, neither of these are good reasons to avoid progressives.

Variance Increases: If you play 9/6 Jacks or Better (JOB) in a non-progressive game the ER is 99.54% and the variance, one measure of the game’s risk, is just 19.51%. However, if you play a 9/6 JOB progressive the ER at 5,000 coins is 100.07% (rounded to the nearest hundredth of a percent) but the variance is 30.65%. Common sense tells you it’s better to be paid more for the royal than less, even with the accompanying increase in variance.

Tax Concerns: Jackpots that are greater than or equal to $1,200 trigger two possible types of taxes, federal and state.

Federal tax regulations are the same for all U.S. citizens, you’ll receive a W-2G and the IRS will get a matching copy at the $1,200 threshold. However, you can write off your losses against your winnings at the end of the year. (If you’re not a U.S. citizen you may or may not owe taxes depending on whether your country has an agreement with the U.S. Canadian citizens, for example, don’t owe taxes as the result of a treaty and can file for a refund at the end of the year.)

State taxes vary. In some states, like Nevada and Arizona, losses are deductible to the extent of winnings. However, if you’re playing in Mississippi, for example, it’s a “gambling tax” and everybody pays; in Wisconsin, Michigan, Illinois and Indiana you pay a state “income tax.” If you’re not a resident you won’t owe income tax. (In Michigan a property tax rebate is indexed to income, so having high aggregate W-2Gs is a valid concern.)

In a worst-case scenario you may get stuck paying non-refundable state income taxes due to gambling W-2Gs, even though you had a losing year. However, I would still recommend that you play a progressive over a non-progressive, given the same paytable. Just switch to a lower denomination. It’s important to find out the tax regulations in the jurisdiction where you’re playing. You’ll then use this information to select both the best game and denomination.


Expected Returns on Progressives

Playable Progressives: Sometimes the ER is so bad that you’d need a very high progressive royal to make the game a good play. Table 1.1 (on page 27) gives the expected returns for games frequently found in Midwest casinos along with the royal progressive needed to make it a good game. Table 1.2 (on page 27) gives the reset ER for games sometimes found in progressive versions. You can see why the progressive games on Table 1.2 would attract pros, they’re good choices at reset and even better in progressives. Note that figures have been rounded to the nearest hundredth of a percent on both tables.

Rule of Thumb

At some point most progressive jackpots are going to be large enough that they’ll clearly be an excellent play. Of course you’ll want to be able to discretely compute the changing ER as you go. Here’s an easy way to do it mentally without attracting attention.

2,000 Coin Threshold: You can use tables 1.1 and 1.2 to give you a ballpark on minimum progressives to make a game playable. However, progressives are constantly changing so you’ll want to be able to mentally estimate the ERs as you play. You won’t be allowed to use a calculator on the casino floor; even if you could, it’s always best to be discrete. Here’s an easy way to do the math.


Non-Deuces Games: Every time the royal grows by 2,000 coins the ER increases by approximately 1.1%. For smaller progressives just increase the ER by .11% for every 200 coins above reset.
Example: The ER for 9/6DDB is 98.98% at reset. If the royal grows to 6,000 coins, an increase of 2,000 coins, then you add 1.1% to the ER and get 100.08%. (98.98 + 1.1= 100.08). The actual ER is 100.088%, rounding to 100.09%, it’s very close.


Deuces Wild: Every time the royal grows by 2,000 coins increase the ER by 1%, or just increase the ER by .1% for every 200 coins above reset.

Example: The ER for Illinois Deuces is 98.91% at reset. If the royal grows to 6,000 coins, an increase of 2,000 coins, then you add 1% to the ER and get 99.81%. (98.91+ 1.0= 99.91). The actual ER is 99.88%, which is close.

Stop Losses

We have all experienced times when it’s simply not your day. So when should you stop playing a progressive?

Bankroll Considerations: Whether you’re at a local casino for an evening or staying for several days you need to consider your budget before you walk out the door and stay within the pre-determined amount. It’s easy for even the most rational among us to make excuses to go over budget when the jackpot increases. Keep in mind that no matter how high the Royal grows the likelihood of hitting a Royal remains a long shot, approximately 1 in 40,000, at the start of each game. You cannot use the previous hand to predict future hands. In other words, no matter how much money you’ve put into the machine or how many hands you’ve played, each new game is an independent event. Once you’ve reached your pre-determined budget maximum, then you should stop playing.

Royal is Hit: Once somebody gets the royal, the ER goes to reset and it may no longer be a good game. You’ll need to have the self-control to leave and find something else to play or do.

Fatigue Sets In: Most people start making mistakes when they’re tired and not able to concentrate. You’re throwing away your advantage every time a button doesn’t hold or you make strategy errors.

Other Reasons: Since you’re there to have a good time you should leave whenever it’s more stress than fun.

Final Thoughts: Progressive video poker jackpots are profitable to both casinos (they’ve made money as the meter increases) and to players, who can play games with ERs greater than 100%. This is a particularly good play for those in jurisdictions with maximum expected return mandates that are under 100%, since the statutes apply to the theoretical percentage at reset. Also, it’s an excellent play whenever theoretical is used for comps, since, once more, the reset value is used. The actual house advantage is less than the multiplier used to compute comps. Look for progressives to become even stronger plays as good paytables continue to be downgraded — guess that’s why pros pounce when progressive jackpots get high.


— Linda Boyd turned to the more profitable game of video poker after years of playing blackjack and live poker. Boyd spent many years as a mathematics educator, a career that proved invaluable in helping her design the statistical tactics featured in her book, “The Video Poker Edge.” Free strategy cards are included with her book. Purchase at www.squareonepublishers.com.